8 retailers on how the coronavirus outbreak could impact their business

Walmart

Walmart executives broke down the retail giant's response to the coronavirus outbreak in China during the company's investment community event on February 18.

"We're managing the issues related to the coronavirus daily," CEO Doug McMillon said early on in the presentation "Our primary focus is of course on our associates and our customers."

The company is expecting a negative financial hit in the first quarter as a result of the epidemic. Walmart is also doubling down on delivery through its partnership with Chinese delivery and logistics firm Dada-JD Daojia.

But the retailer is still running most of its locations in China, albeit on reduced hours.

"We like to keep stores open," McMillon said. "Customers need us. We do it with hurricanes in the US. We're doing it with this situation in China."

Burberry

"The outbreak of the coronavirus in mainland China is having a material negative effect onluxury demand," Burberry CEO Marco Gobbetti said in a statement that the retailer provided to Business Insider. "While we cannot currently predict how long this situation will last, we remain confident in our strategy."

Twenty-four of its total 64 stores in mainland China are closed, while the 40 remaining locations are all running under "reduced hours" with "significant footfall declines."

Gobbetti went on to say in the statement that the company is "taking mitigating actions and every precaution to help ensure the safety and wellbeing of our employees."

Home Depot

3/8

According to Seth Basham, the managing director of equity research at Wedbush Securities, Home Depot — and its North Carolina-based rival Lowe's — sources around 30% of its products from China.

"This is a fluid situation that we're watching closely," a Home Depot spokesperson said in a statement to Business Insider. "We're in constant touch with our suppliers and are making contingency plans to ensure minimal impact to our supply chain."

Basham said that "consumer uncertainty" could also prompt shoppers to "delay bigger-ticket home improvement projects," thus harming the home improvement sector.

McDonald's

4/8

"The situation in China is fluid, and it's concerning," Chris Kempczinski, McDonald's president and CEO, said in a recent earnings call. "Right now, as you would expect, our priority is really on our employees, on our customers, doing everything we can to make sure that they are safe and taken care of."

So far, Kempczinski said that the company has worked closley with local authorities, set up an epidemic prevention and control task force, and provided meals to hospitals workers. McDonald's has so far closed all restaurants in the Hubei province. He added that the epidemic's "actual impact on our business is going to be fairly small," as long as the virus largely remains in China.

"Importantly, we do still have about 3,000 restaurants in the country that are still open," he said. "So, several hundred closed, but 3,000 net are still open."

Walgreens Boots Alliance

The Walgreens Boots Alliance is currently noticing an uptick in demand for products like face masks and bottles of hand sanitizer in many of its locations.

"We're continually working with our supplier partners to help ensure we can meet the needs of our customers," a Walgreens spokesperson said.

The spokesperson added that the company — which acquired a 40% minority stake in Chinese pharmacy chain Sinopharm Holding GuoDa Drugstores Co. back in 2018 —is taking steps to protect employees.

"Working closely with our clinical and safety offices, we continuously share information with our pharmacy team members to help address patient questions based on the latest information available from public health officials and the CDC," the spokesperson said.

Starbucks

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In a recent statement released to coincide with Starbucks' latest earnings, the coffee chain addressed concerns over the coronavirus outbreak.

President and CEO Kevin Johnson said that the company's "partners in China are navigating as health officials respond to the coronavirus."

Over half of the Starbucks locations in China have been closed, while operating hours of all cafés are subjection to modification "in response to the outbreak of the coronavirus," according to the release. The company said its financial guidance hasn't changed in response to the coronavirus, although it is monitoring factors like declining foot traffic and "business disruption."

"We remain optimistic and committed to the long-term opportunity in China, building on our brand heritage and 20-year legacy of profitable growth," Johnson said.

Macy's

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In a call with investors on February 25, Macy's CFO Paula Price said that while it's "too early to know" the full impact of the coronavirus, the company expects possible drops in international sales and delays in importing products sourced from China.

"We anticipate that there could be a small impact on international sales from tourism," Price said. "We're working with vendor partners to minimize any disruption."

Also during the call, Macy's CEO Jeff Gennette said that while the company has a corporate office in Hong Kong, it has continued to operate with normal hours since employees returned after the Lunar New Year holiday. However, Macy's is utilizing policies like flexible schedules that it first developed during the SARS epidemic in 2002, he said.

As far as potential supply-chain lags, Gennette said the 2019 increases in Chinese tariffs have ultimately helped the retailer better understand vendor relations and subsequently aided during its monitoring of the coronavirus.

"We expect a slowdown of products coming from China, but nothing concerning yet," he said. "This is an example of where the tariff situation over the last 18 months really gave us a clear line of sight into China and suppliers."

KFC, Pizza Hut, Taco Bell, and other Yum China brands

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Yum China spun off from its former parent company, Yum Brands, in 2016. The Shanghai-based independent company has the exclusive right to run KFC, Taco Bell, and Pizza Hut restaurants in China, and it also owns a slew of other brands.

In the company's latest earnings call, CFO Ka Wai Yeung said the coronavirus epidemic — which broke out just before the Lunar New Year, a significant holiday shopping period in China — "caused significant interruptions to our business."

"The impact comes from temporary closure of our restaurants as well as substantial decline in sales to the restaurant that remained open," Yeung said.

The CFO went on to explain that "travel restriction, suspended festivities and shortened operating hours" have also been pain points. As a bright spot, Yeung said that "delivery is holding up well" for Yum China.

"Now to better serve our customer and protect our employees, we rolled out contactless delivery, which is very well received by our customers," Yeung said. "In addition, we also rolled out order online, pick up in store, contactless services and saw some encouraging early results as well."